If you make a purchase on a credit card, your retailer gets less money because he has to make some hidden payments as fees. For example, if you are making a payment of $ 150 it’s not that the entire money is reaching the retailer. He/she is getting only a part of it. If you use a card that offers benefits, the store will be getting even less than what it would if you’d use a card that does not come with any benefits. For example, if you are using a card that offers you airline miles to buy something at a mall, the store will get lesser than it would if you would have used a card that does not offer you any perks. This is the reason the stores have decided to price their items higher. On the other hand, there are people who don’t use credit cards.
Till a few days ago stores would offer discounts to people who made cash purchases, but now it seems they will stop offering cash discounts and set the price at one for both plastic money users as well as cash payers. This means that those who don’t possess plastic money, generally the middle and lower income groups will have to suffer because of the higher prices. Now is this fair?
Merchants are not asking the credit card holders to pay more because they think that customers generally spend more credit cards when using credit cards and if these people are asked to pay an additional surcharge for compensating for the lesser amounts the stores get, they’ll be simply offended. This is the reason many stores have decided to offer fewer cash discounts now. In a New York Times report, Shawn Miles, Head Global Policies, MasterCard is quoted as saying “They don’t want to annoy their customers”. Charging surcharges seems to be declared illegal, so higher pricing seems to be the only option left for compensating for the lost income of the stores.
One might ask why should there be these plastic money fees at all. Credit card payments are most probably there because it’s not easy for people to keep huge amounts of cash at all with themselves. Credit cards enable you to pay up with ease. Also for the retailers, preserving cash is more difficult in terms of security as it might be stolen. Also, the cost of transferring the cash to banks requires a fee charge. Also keeping a record of customer credit card payment transactions is easier with a credit card, especially when the money worth involved is too large. This is the reason you simply cannot shun off plastic money. It has to be there.
As plastic money cannot be banned, and its difficult for those who pay cash to pay more to subsidize those who use plastic money the only solution would be for the company issuing the plastic money to stop all perks and rewards, so that the fees that they charge on that account from retailers is minimized and consequently the price is not much and everybody is happy in the long run.